Retirement is a time to enjoy the rewards of decades of hard work, but the reality of superannuation balances can often paint a different picture. As Australians reach 67, the gap between financial expectations and reality becomes clearer, shaping the way they plan for their future.
Like many, you may be wondering whether your superannuation is enough to support the retirement lifestyle you truly desire. With the cost of living on the rise and aspirations for retirement growing grander, it’s a question that deserves a closer look.
The superannuation landscape for young Australians
The good news for younger Australians is that the superannuation system is evolving to help them accumulate more for their retirement years. With employer super contributions set to increase to 12 per cent by July, the next generation of retirees is on track to have healthier retirement savings than their predecessors.
For instance, a 25-year-old earning $100,000 annually with a current super balance of $40,000 could expect to retire with around $810,286 by the age of 67, according to projections by the Australian Retirement Trust.
However, this figure, while substantial, may not suffice for the kind of retirement many Australians envision. The desire to travel internationally every few years and enjoy domestic holidays each summer can quickly inflate retirement budgets.
What Australians really want from retirement
The modern Australian retiree’s wishlist extends beyond the simple pleasures of yesteryear. Today’s retirees dream of dining out regularly, exploring new destinations, and experiencing the world’s wonders.
This shift in expectations is reflected in a recent YouGov survey commissioned by the Australian Retirement Trust, which found that Australians believe they need an average of $940,590 to retire comfortably.
This figure is significantly higher than the $595,000 recommended by the Association of Superannuation Funds of Australia for a comfortable retirement and marks a 19 per cent increase from the previous year’s average expectation.
The changing face of retirement
Baby boomers are leading the charge in redefining retirement, with more of them travelling overseas and indulging in leisure activities than previous generations.
Anne Fuchs, the Australian Retirement Trust’s executive general manager of advocacy, notes that Australians are dreaming bigger when it comes to retirement, which is excellent news for the economy, small businesses, and tourism.
The contrast between the retirement aspirations of today’s retirees and those of past generations is stark. Where once a simple life with weekly social activities and family gatherings sufficed, today’s retirees are reportedly setting their sights on more extravagant pursuits.
‘Fast forward to now, and life is back to normal—Australians are heading overseas for holidays in [large groups], spending more time in the office and our city centres, and enjoying their lives,’ said Fuchs, painting the contrast from years ago, especially when the pandemic hit.
Adjusting expectations and reality
Despite these lofty retirement dreams, there’s a reality check needed. The average super balance in Australia is currently $164,126, which is far from enough for even a modest retirement that goes beyond just covering bills and relying on the age pension.
This gap highlights the need for Australians to actively engage with their superannuation strategies to ensure they can achieve their desired retirement lifestyle.
The journey ahead
As you look towards your golden years, it’s clear that your expectations for retirement are evolving. With the cost of living increasing and the desire for a more active and fulfilling retirement growing, it’s more important than ever to plan and save accordingly.
Whether it’s through additional voluntary contributions, seeking financial advice, or simply staying informed about the superannuation system, taking proactive steps now can make all the difference later.
Are you on track to meet your retirement goals? Consider your current super balance, your retirement aspirations, and the lifestyle you wish to maintain. With careful planning and a clear understanding of what you’ll need, you can work towards a retirement that’s not just comfortable but truly rewarding.
We’d love to hear from our readers about their retirement plans and savings strategies. Are you confident in your superannuation balance, or are you looking for ways to boost your retirement funds? Share your thoughts and experiences with the YourLifeChoices community in the comments below.
Also read: Boost your superannuation with the government’s co-contribution scheme
Superannuation was supposed to Supplement the Aged Pension NOT Replace it.
To get back to what it was supposed to do, the Aged Pension should become Universal, paid to everyone who has attained Pension Age at a rate 75% of MAWE. Dispensing with the couple rate, which is discriminatory against both members of the couple.
Then any income above the Pension Income to be Taxed at the Applicable Tax Rate.
Along with this, phase out the Superannuation Tax Concessions, to help pay for it.
Whilst 75% of Male AWE would be quite generous for most Australians, even higher than their income.
Let’s really not kid ourselves. The Super Tax Concessions are quite the dinner party 🎊 stopper and makes many a LNP supporter quite the happy Chappy.
Until Australians get their head around what a government should do or provide – we’ll just have to live as “every man for themselves “
As in the nuclear power debate. What are we debating. A government should be constitutionally required to provide the necessity of life (power, water, food etc) so if nuclear can do the job – who care what it costs? There was no debate about cost of nuclear subs for a non existent war (unless we keep poking the Dragon for votes). Americans still remember life under British rule prior to the War of Independence- hence their delay in entering WW1 and WW2. I think only by a stroke of luck we tricked the Japs into bombing Pearl Harbour.
Anyway – back to inheritances and super.
Any reasonable democratic government would restrict the superannuation concessions to an Average value based on actuaries life span and what the cost of a comfortable retirement costs??
As an example in our Tax system- travel and vehicle costs can be tax deductible but there’s no real cap. Instead of capping the expense to a basic car being subsidised by the Australian taxpayer or in the case of travel, an economy ticket – the Australian taxpayers are happy to subsidise the cost of Mercedes, BMWs and high end cars and Business Class air travel and high end Hotel stays
You get what you reap
Ps. The only way to fund 75% of MAWE is to cull the Boomers with Covid 2.0 and let them pass on the trillions of inheritance to the younger generations- they don’t disagree and will not mask up next Pandemic. Not even Labor Governments will mask up as they see the value in culling the oldies. The only hope for our survival is Pharmaceutical Companies who make trillions from old people illnesses and would go bankrupt in a successful Pandemic
Wow, you have a very warped sense of reality, you really think that Boomers have Trillions of Dollars. I would say there are a comparatively small percentage of Boomers who are in that category, I know that I am certainly not, and I do not know anyone who is !!!